It is certainly busy for everyone in the property and mortgage markets at the moment, with the spike in activity due to the re-opening of the housing market and the added benefits of the stamp duty holiday. This creates a potent mix of demand which means many of us working long hours to make sure we help as many clients as possible.
Some lenders are still struggling service wise as not only are their staff still working from home, but they are directing some into other departments, for example, Lloyds is diverting 1,000 people to assist with the potential debt crises they see lurking on the horizon.
It is important to manage our client’s expectations on timescales, especially as some lenders really are creaking. Luckily, we keep a close eye on all of this so we know which lenders are going to process urgent cases quicker than others and can explain this to our clients accordingly.
What makes everything a little trickier now is that lenders are now thinking carefully about what is going to happen in the coming weeks as furlough schemes start to change and eventually end.
We are now seeing lenders start to question anyone who has taken a bounce back loan or been on furlough, with a couple of lenders now not lending in these circumstances.
This is proving to be a really difficult question for lenders to deal with as on one hand they must lend responsibly, and there is a massive question mark as to how many furloughed workers will actually get their jobs back over the next few months. Lending a vast sum of money to someone now in the knowledge that they may not have a job in three months’ time leaves them wide open to future issues.
Some are insisting that employers confirm in writing that they will be coming back, even asking for a date of return.
It is very hard for employers to put anything in writing to confirm their plans, especially if you are in certain industries such as travel. So much depends on unknowns especially whilst the threat of a second wave of the virus remains.
On the other hand, the whole point of the assistance is to help people to carry on as normal, so not lending to people because they have been furloughed, or especially just because they have taken a bounce back loan, seems against the spirit of the Government assistance
TSB, for example, will put the salary of a furloughed worker as £1 unless they are receiving a top-up from the employer, whilst Virgin Money will not lend to furlough workers. HSBC will only now lend to furloughed workers if they have a return to work date within three months.
There is a useful article here.
Whilst you can understand the quandary lenders have around furloughed workers, those in receipt of the bounce back loan should perhaps not be discriminated against.
Given the nature of the Bounce Back loan and its ready accessibility, it seems natural for many businesses and landlords to take advantage of this so they have it as a “just in case” provision. It does not necessarily mean that that they are in any kind of trouble at all. You could argue that it would be remiss of them not to take up the offer!
It is concerning to see some lenders making blanket decisions about people’s future, especially for those self-employed or in jobs unaffected by the current situation. There are thankfully vast amounts of people whose jobs and bonuses or whose businesses will not be affected by lockdown and it is important for lenders to be able to lend to these people as per normal.
We continue to campaign on this point and we know all the criteria and the up to date changes of all our 90+ lenders, so all our clients have the very best chance to obtain the finance they need within the required timescale.
Meanwhile, it is still cheap rate wise so in that respect, it remains a good time to borrow.
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.14%, (4.40% APRC) and 5-year fixes from 1.39%, (3.90% APRC) whilst variable tracker rates are around from 1.32%, (3.90% APRC).
Those looking at Buy-To-Let can now obtain products from 1.19%, (4.55% APRC) for 2-year fixed or 5-year fixes are available from 1.62% (3.77% APRC).
For more information and to speak to one of our friendly mortgage advisers please call us on 020 7220 5110 or click here.